Friday, February 5, 2010

Federal Board of Revenue identifies 0.5 Million tax evaders

The task force of the Federal Board of Revenue (FBR) on broadening the tax base has identified 0.5 million rich people, who are not ready to come into the tax net. Sources stated that FBR and National and Database Registration Authority (Nadra) are jointly working on actual number of rich people earning huge income, but still out of the tax net. In this regard, the FBR and Nadra officials have convened meetings in recent past to identify such non-filers of income tax returns in all posh areas of Karachi, Lahore, Islamabad and other cities.

Based on risk-profiling of the taxpayers, the Nadra informed the FBR that approximately 0.5 million potential individuals, belonging to elite class, have not obtained the National Tax Numbers (NTNs). The risk-based profiling of un-registered rich individuals has been jointly done by the FBR and the Nadra. The FBR updated database has shown that out of 2.5 million NTN holders there are more than 1.8 million who are not filing income tax returns. Only 0.7 million are actually filing their due income tax returns. The FBR’s task force on broadening the tax base has decided that initially 150,000 (about 5 percent of the 1.8 million including abovementioned 0.5 million) individuals may be sent letters to file returns or explain why they did not file tax returns. These non-filers would be picked randomly through the computerised system to avoid discrimination.

The selection process would be done under the relevant provisions of the Income Tax Ordinance 2001 with the help of data particularly addresses provided by the Nadra. To ensure credibility of FBR, these letters may be prepared by one person and checked by another FBR official before such intimations are issued to the non-filers. This verification process would ensure transparency during the whole exercise. Taking another major initiative, FBR’s task force has also decided that thorough scrutiny of 150 most potential people would be done at the FBR level. The detailed data analysis of their profiles would be done to check their business trends using third party data. Senior officials of the FBR would be involved during this exercise to ensure that those potential taxpayers are selected, who have a high likelihood of being tax evaders. The analysis of 150 big tax evaders would also help to identify similar nature of cases within the same sectors.

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